Apr 3, 2008

Ismaili business alliances in India

Ismaili-owned bakeries such as this one in Hyderabad, have formed alliances to benefit from working together. Photo: Rafik Khimani

As the rapid growth in the Indian economy continues, the retail marketplace is undergoing dramatic changes. Formerly dominated by about 12 million small outlets, it is now witnessing the entrance of large national and multinational companies.

Armed with professional management, considerable financial and human resources, and the ability to reduce costs through bulk buying, the new entrants are beginning to take a significant percentage of the market share away from their smaller competitors. Their plans and strategic direction are often designed to compete specifically with small retailers. Customer preferences are also shifting as loyalty to small kirana (provision) shops is being challenged by the low prices, wide range of offerings, and ostentatious displays of department stores and supermarkets.

In light of the increasingly competitive environment, Ismailis who own small retail stores in India are adopting new strategies. In 2000, the Aga Khan Economic Planning Board for India (AKEPB-I) put forth the idea of forming Strategic Business Alliances (SBAs) of Ismaili business people. An SBA allows individuals and organisations to come together and share risks, pool strengths, or integrate business functions for mutual benefit.

One of the primary advantages of an alliance is the financial savings afforded to its members through group-buying. Other benefits include reaching a wider market segment through common brand imaging, providing a united challenge to larger competitors, and having access to a forum of like-minded business persons to discuss emerging technologies and trends.

By grouping orders together, alliance members can take advantage of lower costs and other benefits when purchasing supplies and goods for their stores. Photo: Rafik Khimani

With the support of AKEPB-I, 60 Ismaili-owned bakeries in Hyderabad formed the United Bakers' Co-operative Society Limited (UBCL) in July 2000. The alliance's first move was to begin bulk purchasing of their raw materials such as wheat, flour, cooking oil and sugar.

Soon after, suppliers began to offer discounts and special purchasing schemes to UBCL, allowing for even greater savings. AKEPB-I has continued to support the alliance by facilitating consultant visits to individual establishments and conducting business development seminars on topics such as large-scale marketing, customer relationship management and retail industry trends.

Today, UBCL is a successful alliance of more than 140 members who continue to benefit from substantial cost savings and the strength of a united membership — two critical success factors for alliances. It promotes cooperation and knowledge-sharing amongst its members, including imparting best-practices in production techniques and assisting members in designing shop displays. It has also established a talented and experienced set of working committees that can provide leadership and strategic direction to alliance members.

Citing UBCL as a successful model, AKEPB-I and the local Ismaili Councils in India have encouraged Ismaili businesspersons in other professions to form networks. Today, there are alliances from Chitravad in Gujarat to Hyderabad in Andhra Pradesh, with several hundred members in a range of diverse areas including convenience stores, bakeries, footwear stores, transport companies, and farms.

Participants at the AIBAC in Hyderabad watch a presentation by fellow alliance members. Photo: Rafik Khimani

To further enhance support to these alliances, in November 2007, AKEPB-I organised the All India Business Alliance Conference (AIBAC) at Ramoji Film City in Hyderabad. The main objectives of the conference were the sharing of best practices and the expansion of social networks to further strengthen the particpating alliances. The AIBAC also served as a precursor to the inaugural conference of the Ismaili Economic Forum, a Golden Jubilee International Programme to be held in Dubai, UAE in April 2008.

Mr. Nizamuddin Ajani, President of the Ismaili Council for India, presents a participant with the AIBAC commemorative souvenir booklet, containing information on all Ismaili business alliances in India. Photo: Rafik Khimani

The AIBAC was attended by more than 300 participants, including alliance members and managers, as well as leaders of the Ismaili Councils in India. Salim Jetha opened the event with a keynote address sharing his experiences of founding and running Avicenna, a UK-based alliance of more than 650 pharmacists which he heads as Executive Chairman.

Other representatives from successful alliances in India — including the UBCL, the United Dairy Alliance in Mumbai, the Ahmedabad Merchants' Association, and the United Traders' Association in Surendranagar — made presentations on their experiences and achievements. Renowned management guru Mr. Promod Batra, director of Think Inc., followed with an interactive motivational session.

At the end of the day, conference members resolved to emphasise good governance, professional management and continuous skills enhancement in the operation of their alliances. These resolutions will be used as reference points to monitor their ongoing progress and development. Encouraged by the AKEPB-I's support and a strong spirit of partnership, members of the Jamat in India look forward to strengthening their alliances and meeting future business challenges with a united front.